City insiders yesterday speculated that the “death warrant” for the euro had already been written

As Treasury officials worked through the night to soften the impact on Britain, David Cameron warned that the single European currency was facing its “moment of truth”. Business Secretary Vince Cable went further and spoke about “Armageddon” while Brussels officials warned that the chaos threatened to plunge us all into a new recession. France's Sarkozy and Germany's Merkel have been in secret talks over debt-ridden Berlusconi's Italy

Certainly it affects our trade and potentially, in this Armageddon narrative, it affects the banking system, but we’re not there yet. Business Secretary Vince Cable

At the same time, City insiders yesterday speculated that the “death warrant” for the euro had already been written, with a new economic bloc dominated by Germany and France almost certain to emerge in its place. Howard Wheeldon, senior strategist at BGC Partners, said the single currency experiment had failed. “Undoubtedly it has failed. We know the concept of a single currency was flawed right from the start. There were too many big differences, in language, in culture and in the economies. There is absolutely no chance of the euro surviving in its current form. It cannot happen. “There are limits to what the markets, the people and the voters will accept. That doesn’t mean the euro won’t carry on with fewer members, but it has been a failure.”

Stephen Lewis, of Monument Securities, said the search for some sort of Grand Plan or mega-fund to save the euro was corroding the whole project. David Cameron has said it's a moment of truth for Europe “Whatever they do, the underlying economic divergence will still exist,” he said. “It may be that there is no solution and that it would be better to finance an orderly break-up of the euro.” Economist Nouriel Roubini said on Twitter: “It will be soon an end-game for the eurozone: restructurings and exits till break-up. Slow motion train wreck.”

And Gideon Rachman, of the Financial Times, said: “The euro is not an end in itself. The single currency is just an instrument, aimed at promoting economic prosperity and political harmony across Europe. “As the evidence mounts that it is doing the precise opposite, it is time to think not about how to save the euro but about how to scrap it, or at least allow the weakest members to leave. Rather than insisting that the break-up of the euro is unthinkable, Europe’s leaders need to start planning for it.” The secret plans being drawn up are for the creation of a “smaller eurozone” consisting of “fewer members” who would push towards economic and fiscal union.

RELATED: AN IDIOT'S GUIDE TO THE EURO CRISIS Britain would be excluded from the new economic grouping, to the delight of many Eurocrats. French and German officials have already set up a secretive cabal known as the “Frankfurt Group” to pursue their federalist agenda and bully Britain. The Brussels source insisted the plan was not about creating a two-tier Europe but a radical re-drawing of the entire euro project.